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Designing Virtual Currency by Breaking (Almost) Every Rule in the Economics Textbook

I’ve neglected to post my Game Developers Conference presentation slides here. The talk was about designing virtual currency. Not how to design sources, sinks or markets, but how to design the actual objects that are used as money in a virtual economy, and how users interact with those objects. There is much room for innovation in that area, as a couple of historical examples show.

The slides themselves are mostly pictures. To get the full story, click through to SlideShare and check out the Notes tab, which contains an almost full transcript of the talk.

Abstract: Many games today feature virtual money of some sort, whether a “hard currency” sold for real money or a “soft currency” earned through play. The question that this lecture answers is, how do you design money? Not how do players obtain money, nor how do they spend it – but how do you design the money itself. Economists have identified around a dozen attributes of a good money – the kind of money that makes an economy efficient. These attributes make a great guideline for designing serious digital currencies. But in game design, we don’t always want things to be efficient – we might want them to be challenging and fun instead. In this lecture, we therefore turn the economists’ advice on its head and come up with a guideline for designing “bad money”! Both historical and virtual examples are included.